Aro Road and Land Vehicles Ltd v I.C.I

JurisdictionIreland
JudgeMcCARTHY J.,Henchy J.
Judgment Date22 July 1986
Neutral Citation[1986] IESC 1
CourtSupreme Court
Docket Number[S.C. No. 279 of 1983]
Date22 July 1986
ARO ROAD & LAND VEHICLES LTD v INSURANCE CORPORATION OF IRELAND
ARO ROAD AND LAND VEHICLES LTD.
v.
THE INSURANCE CORPORATION OF IRELAND

[1986] IESC 1

No. 11585P/1981
(219/83)

THE SUPREME COURT

Synopsis:

INSURANCE

Contract

Uberrimae fides - Insured - Material information - Non-disclosure - Repudiation of liability by insurer - Evidence on issue of materiality given by expert witness on behalf of insurer - Trial judge of opinion that information not disclosed by insured was not material to the risk that insurer was asked to accept - Evidence of expert evidence was to the contrary - Trial judge accepted opinion of expert witness and gave judgment for defendant insurers - Contract of insurance made in course of informal and impromptu telephone conversation between director of plaintiff company and agents of defendant insurers - No proposal form furnished by defendant insurers for completion by plaintiff company - Director of plaintiff company entered into contract, on behalf of plaintiff company, with transport company for carriage of plaintiffs" goods to consignee - Goods destroyed in transit - Transport company authorised by defendant insurers to act as their agents - Insurance cover suggested by transport company - Director of plaintiff company did not inform defendants or their agents that he had been convicted 19 years ago on indictment for receiving stolen goods - Held that the trial judge should have determined the issue of the materiality of the director's conviction in accordance with the judge's own view, reached in an objective manner, of the evidence - Held that the appeal of the plaintiffs should be allowed because the fact of the director's conviction was not material to the decision of the defendants to accept the risk of damage to, or loss of, the plaintiff's goods while they were in the custody of the transport company - Held that the plaintiff's appeal should be allowed also on the ground that an insurer is not entitled to full disclosure of all relevant information known by the insured if the contract of insurance has been formed in an informal and expeditious manner pursuant to a procedure habitually operated by the insurer - (279/83 - Supreme Court - 22/7/86) - [1986] IR 403

|Aro Road & Land Vehicles v. Insurance Corporation of Ireland|

Citations:

CARTER V BOEHM 1766 3 BURR 1905

CHARIOT INNS V ASSICURAZIONI GENERALI 1981 IR 199, 1981 ILRM 173

JOEL V LAW UNION & CROWN INSURANCE CO 1908 2 KB 863

LOOKER V LAW UNION ASSURANCE 1928 1 KB 554

MARCH CABARET V LONDON ASSURANCE 1975 1 LlLR 169

NORTHERN BANK FINANCE V CHARLTON 1979 IR 149

O'DONOVAN V CORK CO COUNCIL 1967 IR 373, 102 ILTR 169

ROCHE V PEILOW 1985 IR 232, 1986 ILRM 189

WHITWELL V AUTOCAR 1927 2 LlLR 418

1

Judgment of Henchy J. [Griffin J. concurring] delivered the 22 July1986

2

Aro Road and Land Vehicles Ltd ("the insured company") carried on business in Rathcoole, Co. Dublin. In July 1981 it agreed to sell and deliver a quantity of vehicle cabs and engine parts to a firm called L.R. Plant, whose premises were at Maize, Co. Antrim. The insured company's secretary, Miss Broe, telephoned the Road Freight Section of Coras Iompair Eireann ("CIE") to arrange with them to transport the goods by road to the purchaser's premises. She made the arrangement over the telephone with a Mr. Spelman. She told him what the goods were, she gave him the names and addresses of the consignor and consignee, and she estimated the value of the goods at £200,000.Mr. Spelman quoted transport charges at £2 per£1,000 worth of goods.

3

On the 13 July 1981 the insured company placed a firm order by telephone for the transport of the goods and it was made clear by Mr. Spelman that they would be carried at owner's risk. Accordingly he suggested that they be insured, and offered to arrange the insurance. He had to hand blank insurance certificates from the Insurance Corporation of Ireland ("the insurers") and (apparently without disclosing the identity of the insurers) read out over the telephone the extent of the insurance cover that would be provided, namely, "against the risks of fire and theft only, but including physical loss or damage directly resulting from collision or overturning of the carryingconveyance".

4

Mr. Mansfield, the managing director of and principal share-holder in the insured company, reluctantly agreed to take out the proferred insurance. His reluctance was understandable because CIE had previously carried goods for him by road to Northern Ireland and there had been notrouble.

5

Mr. Spelman, having arranged with the insured company for the payment of the transport charges and having agreed that the goods would be transported in one 40' container and three 40' tilts orflats, arranged with Miss Broe that a trailer would be sent by CIE next day to start collecting the goods.

6

Meanwhile the arrangement of the insurance was passed by Mr. Spelman to a Mr. McAdam, who was a Road Freight Superintendent in CIE. He in turn passed the particulars to a firm of insurance brokers, who arranged the insurance with the insurers. The insurance was recorded by the issue of two insurance certificates by CIE, one dated the 15 July 1981 for£200,000 and another dated the 16 July 1981 for £50,000.Those certificates were issued and authenticated by the signature of an official in the Road Freight Department of CIE. CIE apparently had a master policy with the insurers covering such transport insurance, and the certificates state that the cover was to be subject to "the conditions and terms of the original policy".

7

CIE seem to have treated the insurance as having been effected on the 15 July 1981. Apart from issuing the main certificate of insurance on that date, they also on that date issued an invoice and statement for£1,180 (including £400 in respect of insurance) and on the same date one of their representatives called to the premises of the insured company andcollected a cheque for £1,180 to cover the insurance premium of£400 and £780 freight charges. While a further £100was paid by the insured company on the 31 August 1981 in respect of additional cover, CIE began to collect the goods on or about the 15 July 1981 for the purpose of transporting them to their destination in Co.Antrim.

8

From the foregoing account of the transactions that took place before CIE began to transport the goods, the following facts appear toemerge:

9

1. The insured company reluctantly took out insurance on the goods and only at the invitation of CIE.

10

2. Before the goods were transported the only information as to the terms of the insurance that was given to the insured company was as to the extent of the cover.

11

3. Before the goods were transported the relevant certificates were completed by CIE as agents for the insurers.

12

4. Before the goods were transported the relevant certificates were not issued by CIE to the insured company, nor was even the identity of the insurers made known to the insured company.

13

5. CIE had been furnished with blank certificates of insuranceby the insurers and apparently were empowered to effectuate them bycountersignature.

14

6. CIE, with that power to act as agents for the insurers, did not deem it necessary to require any proposal form from the insured company or to make any inquiries save as to the names and addresses of the consignor and consignee and the nature and value of the goods.

15

7. CIE as agents for the insurers made it virtually impossible for the insured company to give the insurers the type of information they now say they were deprived of, for on the 15 July 1981, as soon as they got the premium agreed by the insurers, they not only completed the main insurance certificate but demanded and were paid the premium payable in respect of that certificate.

16

The contract of insurance in this case must be held to have been concluded (subject to a later addendum) on the 15 July 1971. It is well established that the duty of disclosure (where such duty applies) ceases to exist as soon as the contract is concluded: see Whitwell v.Autocar (1927) 2 Ll.R. 418; Looker v. Law Union Assurance 1928 1 K.B. 554.

17

The essential question, then, is whether the non-disclosure now relied on could have been made, or was expected to be made, before the 15 July1981.

18

CIE proceeded to deliver by road the four loads of goods as arranged. Three of those loads safely reached their destination, but on the 20 July 1981 the container was hijacked by a man with a pistol. It was set on fire and its contents destroyed.

19

The insured company brought proceedings in the High Court claiming indemnity under the policy for the loss. The claim was contested on a variety of grounds, but at the end of the hearing the sole issue was whether the insurers were entitled to repudiate liability on the ground that, before the policy was effected, Mr. Mansfield, the managing director of and main shareholder in the insured company, had not disclosed that in 1962 he had been convicted on ten counts of receiving stolen motor parts and sentenced to 21 months imprisonment. It was established that the convictions and sentence took place and that they were not disclosed to the insurers, but it was not shown that Mr. Mansfield had anything to do with the malicious destruction near Newry of the container of goods.

20

This defence was entirely a technical one under the law ofinsurance. It succeeded in the High Court. The judge, having heard expert evidence and having applied the test for the duty of disclosure laid down by this Court in Chariot Inns v. AssicurazioniGenerali 1981 I.R. 199, held that the insurers were entitled to repudiate the policy on the ground of Mr. Mansfield's failure to disclose the convictions and imprisonment that had befallen him nineteen years earlier.

21

I accept without question that it is a general principle of the law of insurance that a person seeking insurance, whether...

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